Deloitte Access Economics has reportedly announced that over 10% of businesses in the country may face risks of closure or failure.
The prevalent business issues are likely to come to the fore when the JobKeeper payment and loan repayment deferral schemes unfavorably come to an end. These schemes and payments are likely to be closed in September. The wage subsidy scheme has been designed to cover a portion of the wage costs of employers, providing a fortnightly payment of $1,500 to the workers. The JobKeeper payments are reportedly set to be closed on 27th September.
Additionally, economists have warned that several businesses in Australia could be forced to shut down due to the economic downturn posed by the ongoing COVID-19 crisis.
Deloitte further noted that nearly 240,000 businesses in transport, professional services, and hospitality, among other industries were at high risks due to financial challenges. It has stated that over 40% of the businesses that are within the category of high-risk failure had cash to remain operational only for the next 3 months.
Business environment may improve in the next 3 months as coronavirus restrictions are starting to ease in several regions. However, without the support of JobKeeper, businesses are likely to face challenges in recovery from the crisis. Tasmania, Victoria, and South Wales have the highest business proportions that access the JobKeeper payments.
Moreover, Deloitte has stated that the 2nd implementation of lockdown measures and restrictions in Victoria would give a higher level of stress on businesses and their reliance on wage subsidy schemes. The Northern and Australian Capital Territories were less impacted by the fiscal cliff owing to a quick ease in restrictions and high presence of public sector workers. The analysis of Deloitte is based on the Federal Government and the Australian Bureau of Statistics data.
In addition, Canberra is anticipated to announce specific packages to aid businesses beyond September. Suppliers, insurers, and creditors are mandated to prepare various contingency plans to manage increased debts.
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